Budgeting and managing

effort on NIH grants

Pre-Award Administration Series

Office of Grant & Contract Administration

(OGCA)

Effort and the messenger

It is very important that faculty and staff know about effort and effort reporting, particularly with respect to federally sponsored projects.

Today we will look at this from the NIH lens. But first, some background…

Effort and the OIG

From 2006 to 2010, the Office of Inspector General at the

National Science Foundation conducted 16 audits of effort

reporting systems at major research universities. The most

common problems found in these audits are:

Failure to adequately account for unfunded effort and

voluntary uncommitted cost sharing

Policies and procedures do not reflect grants management

regulations and requirements

Effort committed in grant proposal not charged to the grant

Audits from 2003 to 2008

Federal agencies have stepped up auditing of effort

reporting (and other items) on federal grants. Data

remains consistent from 2008 to current.

2008: multiple including UCSD, UIUC, UCSF, GATech

2007: (9) CalTech, Vanderbilt, Georgia State, UMBC

2006: (19) Yale, Chicago, Columbia, Berkeley, Penn

2005: (13) Dartmouth, Cornell, Mayo Clinic, UMass

2004: (7) Harvard, Johns Hopkins, U Washington

2003: (2)Northwestern

Resolutions & fines

2008 $7.6M Yale – effort reporting

2006 $2.5M UConn – service centers

2005 $4.4M Cornell – funded non-research staff

2005 $6.5M Mayo Clinic – improper cost transfers

2005 $11.5M Florida International – improper cost transfers

2004 $2.4M Harvard – billing for unrelated salaries

2004 $2.6M Johns Hopkins – faculty effort reporting

2003 $5.5M Northwestern – faculty effort reporting

More outcomes

these audits can be time-consuming, costly, and “unpleasant”,

e.g., Yale: 1.5 year-long audit, covering 6,000 federal grants

1/00 –12/06

$7.6M settlement: $3.8M in actual damages; $3.8M in

penalties

> 1 million pages of documentation submitted to investigators

FBI agents visit/question faculty, staff at home and on

vacation

subpoenas served on 47 grants from 13 departments

The mundane life span of an NIH application

and grant – budgeting effort

• Faculty Salaries • Academic (AY)

• Summer (2.5 months max)

• Faculty should consult with their department chairs to determine maximum effort available for dedication to research projects. Personnel effort on all ACTIVE awards plus teaching load and other commitments cannot exceed 100% . In other words, committed academic year research effort (up to the maximum percentage allotted for research by your department during the academic year) + Teaching load + other obligations = 100%

Budgeting effort continued

• Normally faculty will be allowed to allocate up to a maximum of ~ 4.5 Academic months and 2.5 Summer months across their sponsored projects portfolio in any given year

• Effort charged to sponsored projects must be allocable, allowable, reasonable, and consistently reported and tracked in the UMass effort reporting system – ECRT – more on that later…..

Budgeting effort continued

PI determines effort needed on the project

Budgeted effort will reflect the best estimate of the

actual effort required to meet project goals

If summer effort anticipated, budget accordingly (2.5

month max)…..there are exceptions and a policy to handle the rare exception…..

Budgeting academic effort is not mandatory, but if

effort is significant, course buy-outs should be

explored and effort budgeted as academic effort

Budgeting effort continued

A question at this point will sometimes arise in regard

to academic effort. The scenario runs like this:

PI has budgeted summer effort

The budget is maxed out and cannot accommodate

budgeting academic salary

PI has heard from NIH peer review committees that

contributed effort is valued

PI wants to cost-share academic effort

Budgeting effort continued

Since NIH does not require cost-share, it is

thus considered “voluntary cost-sharing”

UMass strongly discourages “voluntary cost-

sharing” – what to do?

Budgeting effort continued - (excerpted from Cost Share FAQ)

PI quandary: “My contract as a tenure track faculty for

my 9 month academic appointment clearly states that I

should devote a significant amount of my academic time

to seek external funding and establish a strong research

program. This clearly implies that a substantial part of

my effort should be dedicated to research as part of my

9 month salary. Can I state this effort in a grant

proposal?” ……. So again, what to do?

http://www.umass.edu/research/system/files/FAQ_Cost_Share.pdf

Budgeting effort continued - (from Cost Share FAQ)

Answer: How the commitment is worded will

determine the allowability. You cannot directly commit

quantifiable effort to any given project unless you are

requesting the salary for effort from the sponsor or

meeting mandatory cost share requirements. That does

not mean that you cannot perform research activities

that relates to a sponsored award. See examples of

acceptable and unacceptable statements of

uncompensated academic year effort.

Budgeting effort continued - (from Cost Share FAQ)

Example 1 - Acceptable budget narrative

statement:

“Summer salary is requested for 2.4 months of

time to conduct studies on……The PI will be

fully involved in the project throughout the year

to ensure that the scope and objectives are met.”

Budgeting effort continued - (from Cost Share FAQ)

Example 2 - Unacceptable effort statement:

“Summer salary is requested for 2.4 months of

time to conduct studies on....In addition, PI will

devote a significant portion of academic year

effort as part of their normal 9 month

appointment research responsibilities.”

Budgeting effort continued - (from Cost Share FAQ)

Example 3 - Unacceptable effort statement:

“Summer salary is requested for 2.4 months of

time to conduct studies on....In addition, PI will

devote 1 month of academic year effort as part of

their normal 9 month appointment research

responsibilities.”

Budgeting effort continued - (from Cost Share FAQ)

The question will still linger and a PI may continue to

pursue voluntary cost-sharing of effort:

“Why will the University not allow me to show

voluntary cost share? To be competitive I have to show

that I am a good bargain, cost less on my grant and will

provide resources to the project so that I have a better

chance of receiving funding.”

Budgeting effort continued - (from Cost Share FAQ)

Answer: Some Federal Agencies prohibit the inclusion

of voluntary cost share to level the playing field for all

types of applicants in order to address a perceived unfair

competitive advantage that larger institutions might

have. The restriction of the utilization of non-mandatory

cost share has been expanded and will now apply to all

federal agencies as of 12/31/14 as governed by the new

OMB Uniform Administrative Requirements, Cost

Principles, and Audit Requirements for Federal Awards

(2 CFR, Chapter I, Chapter II, part 20; The Uniform

Guidance) which replaces OMB Circular A-21.

Budgeting effort continued - (from Cost Share FAQ)

continued….

This does not mean that investigators should not devote

effort to projects that do not supply salary, nor does it

mean that the University should not contribute resources

toward the project. If there is no mandatory cost share

requirement, as noted above, PIs should instead describe

their participation in terms that do not commit the

institution to a specific percentage of effort or to

specific amounts of other non-salary expenses.

Back to actual budgeting of effort

• NIH requires that effort be proposed in person-months not as a % of effort. Effort can be charged as AY, Summer, or CY depending on appointment type.

• Depending on the type of application (Modular or Detailed budget) effort will be accounted for in the “Personnel Justification” for the former and the Budget & Budget Justification for the latter. See examples of the full budget and the Personnel Justification for the modular format affectionately known as the “PJ”

NIH Effort

Personnel Justification (modular) - PJ

Personnel Justification

Marguerite Hernandez, Ph.D., Principal Investigator, (1.8 months

academic; 1.5 months summer) will direct all aspects of the proposed research,

as well as coordinating design, interpretation, and integration of results from

the project’s personnel and other significant contributors.

John Deere, Ph.D., Faculty Collaborator, (0.10 months academic) will

provide interdepartmental statistical consultation on the project.

Joanne Doe, Ph.D., Postdoctoral Research Associate, (12.0 months

calendar) will design and carry out several molecular biological and

biophysical experiments. She will implement segmental labeling as part of

Aim 1.

(If awarded, this effort must be charged and reported….hold that thought

about the RPPR, and ECRT…..)

Personnel Justification (modular) - PJ

Keep in mind that when a modular budget is submitted,

an in-house budget undergirds it thereby demonstrating

to the NIH and auditors that all costs are “RAA” and it

of course further demonstrates the institution’s RAA-

RAA attitude toward the cost principles:

Go, Go U, Go UMass, Go UMass…

• Reasonable

• Allowable

• Allocable

PJ (continued)

So the budgeted effort within the internal budget gets

carried forward and listed on the PJ. When submitted to

the NIH, this effort level becomes the basis upon which

the award is made. The NIH expects the PI to commit

this effort going forward.

Spoiler alert: this effort will need to be obligated and spent,

reported in the RPPR and tracked in the ECRT system exactly*

as proposed.

NIH Effort - special notes

• NIH is somewhat unique among sponsors in that it requests information on the effort commitments of Key Personnel on 3 separate occasions;

• Initially, in the proposal budget/Personnel Justification

• Prior to award, on a Just in Time (JIT) basis via the Other Support document.*

• Post-award, on an annual basis via the Key Personnel Report portion of the yearly progress report.

* the Other Support document must list all active awards and pending proposals including the effort dedicated to each and parsed between Academic and Summer effort

Request for Just-in-Time (JIT)

So NIH likes the proposal...

JIT continued

…and sends the PI a request for JIT documentation but warns…

“THIS IS NOT A NOTICE OF GRANT AWARD NOR

SHOULD IT BE CONSTRUED AS AN INDICATOR OF

POSSIBLE AWARD.”

“This is a standard notice and request for information from all

principal investigators with grant applications receiving an

impact score of 40 or less…This notice is a request for Just-In-

Time Information. NIH Institutes and Centers (ICs) have varying

pay lines and funding strategies that determine which grants will

be funded.”

JIT and “Other Support” aka “OS”

Primary JIT obligation: “Other Support”

Provides a listing of current and pending grants for

all key personnel listed in the grant application

The OS lists level of effort (in person months) for

all current and pending grants. This effort reflects

the sponsor approved budgets for awards and the

proposed level of effort for proposals.

Sample “OS” document

PHS 398/2590 OTHER SUPPORT

Samples

ANDERSON, R.R. ACTIVE

2 R01 HL 00000-13 (Anderson) 3/1/2010 – 2/28/12 0.60 academic NIH/NHLBI $186,529 1.00 summer Chloride and Sodium Transport in Airway Epithelial Cells

The major goals of this project are to define the biochemistry of chloride and sodium transport in airway epithelial cells and clone the gene(s) involved in transport.

5 R01 HL 00000-07 (Baker) 4/1/2012 – 3/31/2014 0.50 academic NIH/NHLBI $122,717 0.50 summer Ion Transport in Lungs

The major goal of this project is to study chloride and sodium transport in normal and diseased lungs.

NIH issues an award

It’s party time!

Budget set up

Regardless of whether or not the proposal was

submitted under either the Modular or non-Modular

format, the internal budget gets uploaded for use by the

Controller’s Office as the official budget.

The budgeted effort gets loaded and from then on, the

following aphorism is the law:

Effort reported = effort charged to the grant

Don’t fear the RPPR

10.5 months go by and it’s time to submit the

annual Research Performance Progress Report

(RPPR).

The RPPR is the driver for this presentation, all

things considered…..and sometimes it is actually

feared by administrators and PI’s alike….

RPPR – effort report

Among other items, the RPPR includes a

reporting of effort committed by the PI and all

paid personnel who’s effort exceeds one month

of salaried effort.

At this juncture, the PI and their Business

Manager, are reminded of the aforementioned

aphorism:

Effort reported = effort charged to the grant

RPPR – effort report

Excerpt from the personnel effort report:

Don’t fear the RPPR continued

Okay, well, don’t fear the RPPR but respect it

At this juncture, be sure not to be in the unenviable

position of not charging PI or other key person effort to

the grant and instead at the selfless instructions of the PI

said salary/effort was rebugeted to other items like

Graduate Research Assistant salaries. Admirable

selflessness aside, recall the aphorism:

Effort reported = effort charged to the grant

Summary

Effort must reflect the original effort as

proposed to the NIH*

Effort cannot be reported to the NIH unless it

is charged to the grant.

Effort charged to the grant and reflecting the

original proposal is then certified in the ECRT

system

Summary continued

* NIH provides some flexibility around reducing

effort without requiring their prior approval –

cannot exceed 25% or greater reduction.

Any change in effort 25% or greater requires

NIH prior approval. This means prior to the

filing of the RPPR.

ECRT

“It is extremely important to understand that effort is

not calculated on a 40-hour workweek or any other

standard workweek. Effort reports must account for all

effort for which the campus compensates the individual

and, as such, should equal 100%.”

The challenge: effort is loaded in all budgets by OGCA

in person months. And for our purposes with the NIH,

it is required that we track effort in person months or at

least provide a reasonable conversion.

ECRT continued

When loading computed effort in the ECRT system, opt

to load it in a dollar format (comments??)

• First review the NIH grant account

• Confirm relative agreement between the dollar

amount loaded in the original budget, the amount

charged to the grant, and the effort reported in RPPR

taking the 25% variance into account

• Certify the effort after confirming effort harmony as

noted between budget/charged/RPPR reported